Objectively, it's been a wonderful 12 months for Westpac Banking Corp (ASX: WBC) shares and, by extension, anyone who owns them.
This ASX 200 bank stock was going for $21.31 this time last year. But today, those same shares are currently being priced at $31.05 each, meaning the Westpac share price has gained a whopping 45.7% over the past 12 months.
The big four ASX bank is also up a very respectable 34.53% in 2024 to date.
Check that all out for yourself below:
But while this runup for Westpac shares has been fantastic for existing investors, it leaves those dividend seekers looking for that traditionally huge dividend yield from ASX bank shares with a bit of a dilemma: Does Westpac's lower yield still make it a buy for income today?
Remember, a company's dividend yield is directly proportional to its share price.
To illustrate, let's compare Westpac's current dividend yield to what it would have been yielding 12 months ago.
Over the past 12 months, Westpac shares have paid their investors a total of $1.47 per share in ordinary, fully franked dividends. This comes from the final dividend of 72 cents per share that investors received back in December. As well as the interim dividend of 75 cents per share that was sent out in June.
At the current Westpac share price of $31.05, this dividend total gives Westpac a trailing dividend yield of 4.73%. However, if Westpac was trading at the same price as it was this time last year, that dividend yield would be a much more impressive 6.9%.
Image source: Getty Images
Are Westpac shares still a buy for dividend income in 2024?
If you're chasing dividend income, it would obviously have been far better to buy Westpac shares 12 months ago than to buy them today.
However, I would still argue that Westpac is a decent pick for income investors right now. With the market near all-time highs, the dividend yields of many ASX shares have fallen over the past 12 months. As such, it is difficult to find a blue-chip stock offering anything close to a 6.9% yield right now.
So yes, I would consider adding Westpac shares to an income-focused portfolio today. However, given the recent trend, I would be cautious. It is very unusual to see a major ASX bank like Westpac rocket like it has this year. There's a good chance, at least in my view, that Westpac shares might cool off over the coming 12 months.
If that happens, it may present a more lucrative entry point into this ASX bank share for income investors. So perhaps a dollar-cost averaging strategy would work well here. But at the end of the day, there's nothing wrong with buying an ASX bank share with a fully-franked 4.73% yield.
